SINGAPORE: Asia's jet fuel premiums climbed to the highest in over three weeks after some stronger bids on Tuesday.
Cash differentials for jet fuel rose to 90 cents a barrel to Singapore quotes, from 52 cents on Monday.
Jet markets will remain well supported at least until May but beyond that when refineries start coming back from the ongoing seasonal maintenance, the aviation fuel market may take a different stance, market participants said.
There were no jet fuel deals in the Singapore cash market for an eleventh straight session due to no offers versus a number of bids on Tuesday.
Meanwhile, Asia's gasoil cash differentials slipped on Tuesday, ending its six consecutive sessions of gains.
The premium for 10ppm gasoil fell to 39 cents a barrel to Singapore quotes, compared with Monday's 50 cents, the highest so far this year.
In the near-term gasoil would likely remain supported due to summer demand, but the market is trying to gauge whether the current stockpile of inventories, built over the last two quarters before the refinery turnarounds began, can get sufficiently drawn down, traders said.
"Singapore stocks are low because of backwardation. The market is really looking at the Amsterdam-Rotterdam-Antwerp (ARA) stocks," said Nevyn Nah, oil products analyst at Energy Aspects in Singapore.
"Once the ARA stocks start to trend downwards, the diesel market will take that as a signal that it has a much stronger footing for the rest of the year, which has been the narrative since the start of 2018."
Backwardation, when the prompt contract is more expensive than subsequent months, makes it uneconomical to store the product, resulting in a drawdown in inventories. It is usually seen as a sign that the market is rebalancing and prices are likely to head higher in the future months.
Gasoil stocks in the ARA refining and storage hub dipped to 2.69 million tonnes in the week to March 29, compared with 2.95 million tonnes in the prior week, according to data from Dutch consultancy PJK International. The stocks had soared to the highest in more than eight months in February.
SINGAPORE CASH DEALS:
- One gasoil deal; no jet fuel trades.
- Singapore trader Hin Leong sold 150,000 barrels of 10ppm gasoil to Total for April 20-24 loading at a premium of 20 cents a barrel to Singapore quotes.
TENDERS
- Sri Lanka's Ceylon Petroleum (Ceypetco) is seeking a combination cargo of 187,500 barrels of 500ppm sulphur gasoil and 120,000 barrels of jet fuel for May 27-28 delivery in a tender that closes on April 24 with three days' validity.
- Ceypetco is also seeking a combination cargo of 37,500 barrels of 10ppm sulphur gasoil, 112,500 barrels of 500ppm gasoil and 170,000 barrels of 92RON gasoline for May 29-30 delivery in a tender that closes on April 24 with three days' validity.
- India's Essar Oil sold 70,000 tonnes of gasoil from the port of Vadinar for April 5-9 loading to Trafigura.
OTHER
- Oil prices inched up on Tuesday as rising Russian output and expectations of a reduction in Saudi Arabian crude prices were offset by a potential slowdown in US production.
- Russian oil output rose slightly in March to an 11-month high of 10.97 million barrels per day (bpd), above a quota agreed under a global pact to curb production, energy ministry data showed on Monday.
- China has cut resources tax on shale gas production by 30 percent from April 1, the Ministry of Finance said on Tuesday, as the world's largest energy consumer aims to lift domestic gas supplies.
- Top oil exporter Saudi Arabia is expected to cut prices for all crude grades it sells to Asia in May to reflect weaker prices for its Middle East benchmark Dubai crude, trade sources said on Monday.
- Latin America's oil-producing nations, many of which have often shunned investment from foreign firms, are now setting up a fierce competition to attract billions of dollars in investment from the likes of Exxon Mobil, BP and Royal Dutch Shell.
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